"The VAT rise is the most visible example of what we mean when we say the Government is going too far and too fast, because it's clear that it will slow growth and hit jobs."

Questioning the timing of the increase, Mr Miliband will say people already feel squeezed with petrol prices at more than £1.20 a litre and high inflation levels that are forecast to outstrip earnings.

"So when family budgets are already squeezed now is not the time for a VAT rise to make it even harder to make ends meet," he will say.

"The VAT rise coming in tonight means a hit of £7.50 each and every week. It's no wonder experts say it will cost thousands of jobs. And slower growth means making it harder to get the deficit down.

"That £7.50 a week adds up to a £389 a year VAT bill for the average family."

The figure is from a Liberal Democrat poster from the last general election campaign, underlining, Mr Miliband will say, the "broken promises" of Deputy Prime Minister Nick Clegg and the wider Government.

While the seat is seen as a three-way contest, Mr Miliband will say there is "only a two-way fight for the direction of the country" now that the Lib Dems are in coalition with the Tories.

Lib Dems will also step up their campaign in Oldham East and Saddleworth with six ministers visiting this week, including Mr Clegg for the second time.

Former leader Charles Kennedy, deputy leader Simon Hughes and party president Tim Farron will also be campaigning in the seat which Lib Dem candidate Elwyn Watkins lost by only 103 votes last May.

Prime Minister David Cameron is yet to visit, although he has pledged to do so when prime ministers have traditionally steered clear of by-election campaigns in the past.

But he has fuelled suspicions that the Tories are not mounting a serious challenge in the seat by wishing the Lib Dem candidate well.

The Prime Minister was yesterday urged to rule out any electoral pact between the Conservatives and Liberal Democrats amid Tory fears that ministers are plotting a "Frankenstein" merger between the two parties.

Senior Tory MP Mark Pritchard suggested that the "heart and soul of the Conservative Party" was under threat from ministers seeking a long-term settlement with the Lib Dems.

A number of Tory MPs, as well as former prime minister Sir John Major, have spoken of the need for joint coalition candidates at the next election. There have been reports that a senior minister is also backing the idea.

Writing in the Mail on Sunday, Mr Pritchard hit out at what he called the "purple plotters".

He said voters would be looking for something new at the next election, but added: "Hopefully this change will come in the form of a distinct and self-confident Conservative Party - not a 2015 Frankenstein or political chimera."